Tight Housing Markets favor sellers

June 18, 2014

Jodi Schwan, jschwan@sfbusinessjournal.com

The real estate market in Sioux Falls keeps tightening, as new listings in February dropped 23 percent compared with the same time last year, according to the Realtor Association of the Sioux Empire.

There were 225 new listings for the month. Closed sales totaled 140, which is a 7 percent increase compared with last year.

The market has a 3.7-month inventory of homes for sale, down 11 percent from last year.

“I think some of the reason is that it’s cold,” said Brandon Martens, president of the association and an agent with HJN Team Real Estate. “It’s been a very, very cold winter and has caused people to not want to sell and not get out to look at properties as much as they have in the past, and that’s creating an inventory shortage.”

This weekend’s warm-up showed a noticeable boost in activity, according to Randy Rozeboom of Harr-Lemme Residential Real Estate. He had 10 people attend a Sunday open house for a west-side house priced at $210,000.

“They were all positive and upbeat, and I think it was in part because it was nice weather. It’s funny how that plays a part unless you’re absolutely motivated,” Rozeboom said. “I don’t have a lot of competition (in the neighborhood). Because of that, I anticipate a pretty quick sale. I really look forward to a good year again.”

He also has noticed the decreasing inventory of houses available and said buyers need to be ready to move fast.

“It’s hard,” Rozeboom said. “If I could take 10 listings today in that $180,000 to $200,000 or $220,000 range, I would because it is an active market.”

Martens said he prefers to see a five- or six-month inventory of homes.

Interest rates have some bearing on the shortage, he said. People who refinanced at low rates are having a hard time deciding to sell and buy a new house at a higher rate.

Houses ranging from $150,000 to $250,000 in well-known neighborhoods are the hardest to find, he said.

“Kingswood, Tuthill, the Crestview, Scenic Heights addition, Prairie Tree … developments that actually have a name you know, those are the ones you really have a hard time finding homes for sale,” Martens said.

The market is even tighter in some of the communities near Sioux Falls. There were 10 new houses listed in February in Brandon, a 41 percent decrease from last year. Listings are down in Harrisburg 18 percent.

“Some of those outlying communities have definitely seen a shortage of homes for sale,” Martens said.

Builders have taken out permits for 44 single-family houses through February, and Martens said he expects a solid amount of new construction throughout the year even as the industry contends with a labor shortage.

“The builders are building as fast as they can. There is a shortage of carpenters, the actual guys doing the work. The trades are definitely low in employment numbers, which is not helping. We’re getting out-of-state trades to come in and build houses because there’s no one locally to build them.”

Sioux Falls real estate market in February

 

New listings

2014: 225

2013: 293

 

Closed sales

2014: 140

2013: 131

 

Average sales price

2014: $179,826

2013: $158,142

 

Inventory of homes on the market

2014: 3.7 months

2013: 4.1 months